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Marathon Oil stays focused on shareholders returns, helped by rising oil prices from SNL Daily Gas Report Marathon Oil stays focused on shareholders returns, helped by rising oil prices BYLINE: Mark Passwaters SECTION: Extra Marathon Oil Corp. intends to remain conservative with spending in 2019 while focusing on four major domestic plays, company officials said during their third-quarter earnings call Nov. 8. CEO Lee Tillman said the company started 2018 with a price outlook of $50 per barrel for West Texas Intermediate crude and budgeted accordingly. Even with prices well above that level, Marathon stuck to its initial approach, returning cash flow to investors. Tillman said the company has returned more than $600 million to shareholders through dividends and stock repurchases during the 2018 calendar year. "We have remained disciplined, and we have maintained our focus on differentiated execution. Our capital budget is not a suggestion. It is a commitment upon which we must deliver," he said. "We are driving meaningful corporate returns improvement and are delivering significant free cash flow for our shareholders. This is our model both for 2018, for 2019 and in the future." Marathon, which once was a major international player, intends to spend nearly all of its capital budget in 2019 on four domestic plays: the Bakken and Eagle Ford Shales, the STACK play in Oklahoma and the Delaware Basin, an unconventional subset of the Permian Basin. "As we look ahead to 2019, rest assured that our framework for success will not change. We will remain focused on improving our corporate-level returns and growing our cash flow for debt-adjusted share," Tillman said. Marathon spent 60% of its capital budget in the Eagle Ford and Bakken in 2018, and Tillman said analyst should expect more of the same in 2019. The CEO said those plays are where the company is seeing the best returns and greatest capital efficiency, noting that production was up 8% in the Eagle Ford sequentially in the third quarter and oil production is up 10% year over year, even though initial plans were for production to remain flat. The strong returns prompted Marathon to increase its full-year production guidance to 405,000 to 415,000 barrels of oil equivalent per day from 400,000 to 415,000 boe/d. In the third quarter, production averaged 419,000 boe/d. Even though Marathon intends to spend most of its capital in the Bakken and Eagle Ford in 2019, Tillman did talk up the prospects for the STACK and Delaware Basin. "Oklahoma and Northern Delaware are delivering strongly, and they're going to compete for capital even though they are less mature and much earlier in the development cycle." Marathon reported $200.0 million, or 24 cents per share, in adjusted net income for the third quarter, compared to a loss of $68.0 million, or 70 cents per share, a year earlier. The S&P Global Market Intelligence consensus normalized earnings estimate for the third quarter was 20 cents per share. Shares of Marathon opened higher Nov. 8 but gave most of those gains back by midday. |
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